Examine any company and its reporting mechanisms, and you’ll find that financial value is determined by a profit and loss report and a balance sheet. These reveal how well the company has fared historically, and the current state of finances.

But the P&L and balance sheet tell us nothing about the company’s future success.

One predictive indicator of a company’s wellbeing – one that is rarely measured – is the strength of its relationships.  As any good public relations professional will tell you, good relationships with clients, customers and the community are central to any company achieving its mission – whether that’s selling a product, providing a service, or advocating change.

For decades, PR professionals have translated media coverage into dollars with a simple formula: a newspaper article is of equivalent value to an advertisement of the same size and a 30 second news grab equates to a 30 second ad in terms of value.  But what if the publicity is bad?  Do we live and die by PT Barnum’s philosophy that all news is good news?

While it’s true that there are some companies specialising in other forms of measurement – such as share of voice, percentage of content and favourability ranking – it still boils down to a focus on communication, not on relationships.  It’s about how well a company has manipulated the media, rather than how well it has managed its relationships.

When we increase the focus on the relationships and deal directly with the stakeholders then the need to communicate through the media lessens.  While we’ll never eliminate the need for media relations entirely, when we increase the focus on relationship management our stakeholders start to trust us more. 

As a result, any negative story that appears in the media is likely to have a significantly reduced impact.  It’s time to measure and evaluate the impact of our public relations efforts on the relationships themselves rather than on the campaigns we run.

The Stockholm Accords, which were developed at the World Public Relations Forum in June 2010, infer that we can measure relationships and diagnose their strengths and weaknesses – yet, there are very few analytical tools able to achieve this outcome. 

Researchers and practitioners have acknowledged the need for a more accurate measurement tool, but despite this, analysis of stakeholder relationships continues to be undertaken in an anecdotal or non-quantifiable way. 

ORDA sprang from my ten year research project which aimed to answer a simple question: “what are the components of a relationship and how do we measure them?”  I found that any relationship can be measured by assessing three elements:

• Governance: the way an organisation treats people and behaves when dealing with its stakeholders
• Value: the tangible and intangible benefits that the stakeholders desire from the relationship with the organisation
• Communication: how and what information is provided and how the organisation manages expectations.

Through detailed analysis of each component, ORDA enables organisations to accurately diagnose the strengths and weaknesses of their relationships, and quantify changes to those relationships over time.  After all, if it isn’t measured, it can’t be managed.

Just as a better result in your financial audit – a stronger balance sheet or bottom line – indicate a more profitable and sustainable organisation, so too a relationship score is an indicator of goodwill and future performance. Ultimately, relationships are an organisation’s asset. It’s time we acknowledged and nurtured that asset.

David Hawkins is MD at PR agency Socom